According to Swanson, six expenses make up 90% of production budgets—land is one of the biggest. Because land is so closely tied to yield potential, it’s important to make sure you’re getting appropriate ROI from that investment.

Corn following soybean expenses (Via wells fargo insight)

In $/bu.

Low Yield

Average Yield

High Yield

Spread, Low

to High

corn yield

136

170

204

68

variable cost

$2.74

$2.43

$2.12

$(0.62)

machinery ownership

$0.74

$0.59

$0.49

$(0.25)

family and hired labor

$0.27

$0.22

$0.18

$(0.09)

Cash rent

$1.11

$1.15

$1.21

$0.10

Total cost

$4.86

$4.38

$4.00

$(0.86)

“Yield growth exceeds population growth, expect flat agricultural prices,” Swanson says. “You can’t market your way out of this problem. Cost of production dominates marketing, go where the money is.”